Most firms on Wall Street focus on large and mega-cap stocks, as they provide a degree of safety and liquidity. Unfortunately, many investors are limited in the number of shares they can buy. Many of the biggest public companies, especially the technology giants, trade in the low to mid hundreds, all the way up to over $1,000 per share. At those steep prices, it’s pretty hard to get any decent share count leverage.
Many investors, especially more aggressive traders, look at lower-priced stocks as a way to not only make some good money but to get a higher share count. That can really help the decision-making process, especially when you are on to a big winner, as you can always sell half and keep half.
We screened our 24/7 Wall St. research database and found five stocks trading under the $10 level that could provide investors with some solid upside potential. While much more suited for aggressive accounts, they could prove exciting additions to portfolios looking for solid alpha potential.
Glu Mobile
This gaming stock could have some big upside for aggressive accounts. Glu Mobile Inc. (NASDAQ: GLUU) develops, publishes and markets a portfolio of mobile games. The company develops and publishes a portfolio of mobile games designed to appeal to a cross-section of the users of smartphones and tablet devices.
The company’s portfolio of games include Contract Killer, Cooking Dash, Covet Fashion, Deer Hunter, Design Home, QuizUp, Racing Rivals and Tap Sports Baseball, as well as games based on third-party licensed brands, including Gordon Ramsay DASH, Kendall & Kylie, and Kim Kardashian: Hollywood.
Piper Jaffray rates the stock a Buy and has a $7.50 price target. The Wall Street consensus target is $6.71. The shares closed trading on Friday at $6.57.
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J.C. Penney
This old-school retail stock continues to fight for relevance in a tough environment. J.C. Penney Co. Inc. (NYSE: JCP) is a promotional department store that markets to value-oriented, middle-income customers. It offers apparel, footwear, jewelry and home goods at affordable prices and is based in Plano, Texas.
Most stores are located in shopping malls, but the company is expanding its fleet of smaller, freestanding units in regional lifestyle centers or strip malls. Approximately 50% of the company’s merchandise is private label or exclusive brands.
Merrill Lynch rates the stock a Buy and has a huge $5 price target. The consensus price target is $3.32, and the stock closed Friday at $2.44.
Kinross Gold
More aggressive investors may want to consider this smaller cap gold miner. Kinross Gold Corp. (NYSE: KGC) engages in the acquisition, exploration, development and production of gold properties. The company’s gold production and exploration activities are carried out principally in Canada, the United States, the Russian Federation, Brazil, Chile, Ghana and Mauritania. It also produces and sells silver.
Kinross announced last year that it will proceed with the Tasiast Phase Two and Round Mountain Project W projects. At full production by 2020, CEO Paul Rollinson sees these two projects stabilizing the company’s gold equivalent output in the 2.5 million ounce range. Trading at a discount to the peer producers, some believe that this valuation gap could be closed due to these projects.
Merrill Lynch has a $4.75 price objective, which compares to the consensus target of $5.10. The shares closed Friday at $3.93.
Kosmos Energy
RBC just raised this stock to an Outperform rating, and it is a solid energy exploration and production play. Kosmos Energy Ltd. (NYSE: KOS) is a conventional oil and gas exploration and production company focused on the Atlantic margin. The company focuses on unlocking new hydrocarbon systems and growing and maturing discovered basins through follow-on exploration success, development and production.
Although many companies in the industry have scaled back exploration, Kosmos believes this is the best route to generating value, seeking to replicate its discovery and development of the Jubilee field in Ghana.
The $10 RBC price objective compares with the $9.17 consensus estimate. The shares closed trading on Friday at $8.67.
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Tetra Technologies
This small-cap oilfield services play has some big upside potential. Tetra Technologies Inc. (NYSE: TTI) is a diversified oil and gas services company, with the bulk of its revenue derived from drilling and completion fluids, as well as contract compression services by way of its 42% stake in CSI Compressco.
The analysts at B. Riley FBR just raised the stock to Buy, noting that they view it as the third-largest player in the onshore U.S. contract compression arena, where demand is structurally accelerating and the current upcycle has just reached its “sweet spot.”
B. Riley has a whopping $8 price target for the stock. The posted consensus target is $5.93. The shares closed Friday at $4.70.
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Five stocks for aggressive accounts that look to get share-count leverage on companies that have sizable upside potential. While not suited for all investors, these are not penny stocks with absolutely no track record or liquidity, and major Wall Street firms have research coverage.
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